Property buyers frustrated by banks who seem to be a law unto themselves when setting interest rates and fees will be relieved to know that it is the courts, not the lender, that will decide if an interest rate is disproportionate or not. As banks are notorious for their greed the courts often find on behalf of the distressed mortgagee.

There is precedence; this was set during an Álava Provincial Court Case on April 13, 2001. A bank had imposed an eye-watering 18% interest rate on a consumer’s deferred mortgage repayment.

The victim householder wisely referred to the rate recommended by the Consumer Credit Act. This was 10.62 percent.

The bank argued that the rate had been agreed by the householder so it does pay to read the small print. The warmly welcomed court decision ruled that in Spain, independent agreements (autonomy) will always be overruled and limited by the laws relating to Law, Moral and Public Order rulings.

Spanish property specialist and lawyer, Maria L. de Castro of costaluzlawyers.es says, “This means that any borrower need no longer presume that an agreement signed in haste, or under duress, is untouchable. The ruling opens the gate for legal examination of abusive rates of interest, not just by banks but by other lenders too.”

This important case means that it is the Spanish legal system empowered by government, not the banks, that makes a final decision on interest rates imposed even if agreement had been previously been made.